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Special report: Linking the health care supply chain

by Carol Ko, Staff Writer | December 18, 2013
From the December 2013 issue of HealthCare Business News magazine

Amid these new supply chain challenges, a final rule issued by the FDA in September requiring unique device identifiers may make life a little easier for health care logistics firms.

The rule was intended to address shortcomings in tracking malfunctioning devices. In the past, the FDA has struggled to issue a timely response to faulty medical devices that posed a threat to patient safety.

By issuing a unique device identifier, the FDA hopes to identify and take action on product problems more rapidly and efficiently. The rule will have far-reaching consequences for the entire medical device industry, requiring manufacturers to purchase new software and equipment and perform additional employee training.

Although it represents a costly logistical headache for manufacturers, it may drive unintended benefits for the supply chain side, where increasing inventory visibility remains a key concern for manufacturers.

“Right now, there are so many devices out there, just by chance two or more manufacturers may have the same catalogue number — when customers receive the product it might cause confusion,” says Mike Groesbeck, senior vice president of quality and regulatory affairs at Cardinal Health.

“Manufacturers are worried about getting inventory as close to the end user as they possibly can, trying to get inventory out of the trunks of cars to locations where they have real time visibility. The ability to have end-to-end visibility — everything from inventory at rest to inventory in transit — is critical to reduce cost,” says FedEx’s Asmus.

If every device has a unique number, it allows for better visibility of each individual product in the supply chain. “You’ve got things like standardization, common nomenclature – without that it would be very difficult to do the things that need to be done in the industry,” says Triose’s Tauber. “You have the opportunity to drive savings through things like standardization — how do you know how many widgets or devices you’re using and what manufacturers you’re using.”

By knowing exactly what products are going where, executives can get a better idea of where they can pare back costs and drive efficiencies — say, ordering only three different brands of the same product where there used to be 13.

“You now have better visibility to each unit level item within your supply chain and that allows the inventory and resource planning system to allocate the final destination more specifically and to move those around in supply chain to meet dynamic demand,” says UPS’ Hooker.

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